A lot of things change when you start a serious relationship. You move in together; you divide up the housework … and you tackle your joint finances.
Many people avoid talking about money with their partner because they don’t want to fight. Financial matters can feel complicated and personal. Plus, Canadians now have the added stress of rising inflation and interest rate hikes.
Still, there is good news. According to a 2022 survey by the Chambre de la sécurité Financière (CSF), committed couples are now more transparent about their investments and debt. But there’s always room for growth.
Here are 5 tips to help your financial chats go smoothly.
1. Be open with your partner
Couples often wait too long to talk finance.
“Each person’s views about money should be clarified early on,” says Olivier Giroux. He is president of Services Financiers O. Giroux Inc., a Sun Life partner firm.
“Even on the first date, there’s the question of who’s paying the bill. That just shows how hard it is, as a couple, to avoid money conversations.”
It may not seem romantic but being frank about your finances will strengthen your relationship.
These questions can give you a better handle on your shared financial situation :
- How much debt are you in?
- What do you plan to do about it?
- What big ticket items do you plan to buy: a home, a car, a trip?
- Where do you see yourselves in the next five years? Do either of you want to go back to school, change careers or start a business?
2. Get informed
People are often reluctant to bring up financial matters because they lack confidence. The solution? Learn more about money. After all, knowledge is power…
A one-on-one meeting with an advisor can help answer your questions. And it can also give you the confidence to talk finances with your partner.
3. Figure out a fair split
Even in a committed relationship, it’s a good idea to keep your own bank account and credit card. Why? To protect you both, and to support a level of financial independence.
But for your shared expenses, it can be helpful to open a joint account. The challenge? Figuring out who pays for what.
One approach is to make each partner’s payments proportional to their salary. Any remaining income can then be either spent or saved, as you see fit.
“When spouses have similar salaries, it’s easier for them to share expenses,” Giroux says. “But problems can arise when there’s a big gap in income levels. If that’s the case, avoid a 50/50 split – otherwise, one spouse may feel snowed under as they try to keep up.”
Split assets that increase in value equally, so that each spouse benefits from the growth in value. A house is an obvious example, but current expenses can be another.
When it comes to money, people often have different attitudes and priorities. The bottom line? Respect your partner’s views. The goal is to create balance and equity, so both parties feel comfortable.
Ready to get on the same page as a couple?
4. Create a budget
Once you know where you stand financially, it’s time to make a budget as a couple. Budgeting is an excellent way to learn to agree on spending. Ideally, you’ll balance joint expenses while protecting your individual and shared assets.
5. Discuss your finances with an advisor
Book a meeting with an advisor. It’s a vital step in ensuring you and your family have a bright financial future. And it could help keep your relationship happy! Find an advisor near you.
Couples and money talk: what to avoid
- Waiting till something stressful happens
Don’t wait until one spouse leaves their job or massively overspends before discussing money. A less stressful atmosphere will make for a much more productive conversation. Plus, facing your financial worries can bring you closer together.
- Blaming your partner
This only impairs teamwork, as well as your ability to compromise and work toward real solutions. A dash of optimism will make it easier for you to find ways to achieve financial security.
- Judging personal spending habits
Try not to judge what your partner is doing with their money. Each person has their own passions and interests.
“In a relationship, there is Partner 1, Partner 2, and the couple,” Giroux says. “Keep in mind that some things belong to each of you, and some things belong to the couple.”
- Not taking an interest in your shared finances
“In cases of death or divorce, the person who isn’t used to handling the money will end up in a tight spot,” Giroux points out. Or financial abuse may have been occurring without their knowledge.
- Having one spouse pay the mortgage and the other spouse pay related expenses
This isn’t equitable because one spouse is getting wealthier at the expense of the other. “That’s a direct route to poverty for one of the partners,” according to Giroux. “Avoid it at all costs.”
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This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.